WASHINGTON : Hours after sweet talk by US Ambassador-designate Sergio Gor of India being the "most essential partner" of the US, his boss, Trump, imposed a new 25% tariff on countries doing trade with crisis-hit Iran, a move set to impact New Delhi severely. India, which is among Iran's top five trading partners, may see its tariffs on US imports surge to a whopping 75%.
Tightening the noose around Iran, which is witnessing its biggest anti-government protest in years, Trump said any country doing business with Iran would "immediately" face a 25% tariff on trade with the US. "This order is final and conclusive," Trump underlined.
Now, without a trade deal with the US, Indian goods are already facing the highest US tariff rate of 50%. Apart from a 25% reciprocal duty, Trump slapped an additional 25% punitive levy on India over its continued purchase of Russian oil. A further 25% duty will take the total tariffs on Indian imports to the US to 75%.
There is also the spectre of a US bill that proposes 500% tariffs on countries continuing to purchase Russian oil despite sanctions. Trump has already approved the bill that targets countries like India, China, and Brazil.
New Delhi has long-standing trade and strategic links with Tehran, including energy imports and the development of the strategically vital Chabahar Port, seen as India's gateway to Afghanistan and Central Asia that bypasses Pakistan.
Though China is Iran's biggest trading partner, Trump's move has consequences for India, beyond trade as well. The timing of Trump's announcement is important, coming hours before Indian and US officials sat down for another round of negotiations over the long-pending trade deal.
The fresh tariff announcement is being viewed by a section of experts as another pressure tactic to get India to agree to US terms on the trade deal.
Recent revelations by US Commerce Secretary Howard Lutnick have already shown how Trump can make a country pay for not massaging his ego or doing his bidding.
Last week, Lutnick revealed that the trade deal between India and the US failed to materialise, not because of policy issues, but due to Prime Minister Narendra Modi's refusal to directly call Trump and seal it.
The new Iran-linked tariff compounds existing trade pressures on India. As mentioned earlier, India is among Iran's top five trading partners.
According to government data, the total trade between Iran and India in 2024-2025 was $1.68 billion (Rs 14,000 crore). While India exported goods worth $1.24 billion (Rs 10,000 crore), its imports were worth $440 million (Rs 3,700 crore).
However, it must be noted that India-Iran trade has been coming down since 2019, when New Delhi stopped importing Iranian oil due to Trump sanctions.
In fact, since 2019, New Delhi's trade with Tehran contracted by 87%, falling to $2.3 billion (Rs 19,100 crore) in 2024 from $17.6 billion (nearly Rs 1.5 lakh crore) in 2019.
India's main exports to Iran include organic chemicals, basmati rice, tea, sugar, pharmaceuticals, fruits, pulses and meat products. Iran has been among the biggest overseas markets for Indian basmati rice. The new tariffs may disrupt basmati exports. Key imports include methanol, petroleum bitumen, liquefied propane, apples, dates and chemicals.
Any sustained enforcement of the US tariff could force Indian companies to scale back dealings with Iran to protect access to the American market, potentially disrupting exporters dealing with chemicals, agriculture and pharmaceutical products.
The U.S. has imposed a 25% tariff on countries trading with Iran, significantly impacting India, one of Iran's top trading partners. This move could raise tariffs on Indian imports to the U.S. to 75%, complicating trade relations and pressuring India to align with U.S. policies. The tariffs also threaten India's strategic projects and exports, particularly in agriculture and pharmaceuticals.